HE,
Here's the headline version...
Started buying property in the early 90s in Melbourne and picked up three very poorly researched IPs in inner city hi rises. At the time I was too highly leveraged, too reliant on rental income and tax breaks, too naive as to how much body corp rates and other incidentals could impact on cashflows and when I found myself without tenants for a (in hindsight) short period of time, I went close to wiping myself out. (I've talked about this in another thread a while back).
Started a business in 94 which has been the key to my current financial position - haven't used shares and property as a mechanism for
creating wealth, rather as one to
store wealth. I nominally retired about five years ago but that doesn't stop me coming in the office more days than not as it's still a passion.
Read a lot after my early foray and decided I needed to buy for future cashflow, so broadly a "value" investor if I had to be themed. Put together a list of "rules" for asset purchasing in different asset classes. My rules for resi property were:
Must be free standing house on own title
Must be within 10km of Bris/Syd/Melb or 5km of Adel/Per
Must be in a median or higher suburb on a socioeconomic scale
Must be cashflow positive at current interest rates
Must be cashflow positive at 9% (my view on long term interest rates)
I was recently talking about my "rules" and had some smarta$$ Gen Y tell me that "well, if that was your criteria you've obviously never BOUGHT any property!" The reality is, in 94/95 you could throw a dart at a map and anything you hit would pretty much fulfil the criteria. I picked up 9 properties through the mid to late 90s without much effort. Being cf+ from day one and given that I felt leverage was overrated, I used the rental income to pay down the debts.
By 2000, it was becoming increasingly difficult to find anything that fit my criteria, but I did manage to pick up one further IP in 2002 in Brisbane. I haven't seen anything that's even remotely close since 2004.
I continued to patiently pay down my debt using the cashflows from the IPs to fund the repayment as fast as I could. Along the way, I've had several tax advisors scream at me that I'm not making the most of my tax advantages and maybe I haven't, but I'm now debt free. If I was still heavily leveraged I'd now be having to work out how to manage my debt into retirement and that's a stress I don't want.